{"url_path":"/sec/ree/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 Exhibits.","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1843588/0001628280-26-035308-index.html","accession_number":"0001628280-26-035308","cik":"0001843588","ticker":"REE","issuer_name":"REE Automotive Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1843588/0001628280-26-035308-index.html","primary_entity_key":"0001843588","primary_entity_name":"REE Automotive Ltd."},"word_count":16945,"has_tables":true,"body_markdown":"Item 19. Exhibits.\n\nExhibit NumberDescription\n\n1.1\n\n[Amended and Restated Articles of Association of REE Automotive Ltd.incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (File No. 333-261130) filed with the SEC on February 24, 2026.](https://www.sec.gov/Archives/edgar/data/1843588/000121390026019872/ea027799501ex4-1_reeauto.htm)\n\n2.1\n\n[Specimen Class A Ordinary Share Certificate of REE Automotive Ltd., incorporated by reference to Exhibit 4.5 to Amendment No. 3 to the Company’s Registration Statement on Form F-4 (File No. 333-254070) filed with the SEC on June 21, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021033268/ff42021a3ex4-5_reeauto.htm)\n\n2.2\n\n[Form of Assignment, Assumption and Amendment Agreement, by and among REE Automotive Ltd, 10X Capital Venture Acquisition Corp and Continental Stock Transfer & Trust Company, incorporated by reference to Exhibit 4.7 to Amendment No. 3 to the Company’s Registration Statement on Form F-4 (File No. 333-254070) filed with the SEC on June 21, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021033268/ff42021a3ex4-7_reeauto.htm)\n\n2.3\n\n[Form of Letter Agreement, incorporated by reference to Exhibit 4.9 to Amendment No. 3 to the Company’s Registration Statement on Form F-4 (File No. 333-254070) filed with the SEC on June 21, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021033268/ff42021a3_reeautomotive.htm#T804)\n\n2.4\n\n[Investor Rights Agreement, dated as of February 3, 2021, by and among REE Automotive Ltd and certain shareholders of REE Automotive Ltd., incorporated by reference to Exhibit 4.10 to Amendment No. 3 to the Company’s Registration Statement on Form F-4 (File No. 333-254070) filed with the SEC on June 21, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021014453/ff42020ex4-10_reeautomotive.htm)\n\n2.5\n\n[Description of Securities, incorporated by reference to Exhibit 2.5 to the Company’s Registration Statement on Form S-8 (File No. 333-261130) filed with the SEC on February 24, 2026.](https://www.sec.gov/Archives/edgar/data/1843588/000121390026019872/ea027799501ex2-5_reeauto.htm)\n\n4.1\n\n[Agreement and Plan of Merger, dated as of February 3, 2021, by and among REE Automotive Ltd., Spark Merger Sub, Inc., and 10XCapital Venture Acquisition Corp, incorporated by reference to Exhibit 2.1 to Amendment No. 3 to the Company’s Registration Statement on Form F-4 (File No. 333-254070) filed with the SEC on June 21, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021014453/ff42020_reeautomotiveltd.htm#T1100)\n\n4.2\n\n[Form of Subscription Agreement by and between Subscriber and REE Automotive Ltd., incorporated by reference to Exhibit 10.4 to Amendment No. 3 to the Company’s Registration Statement on Form F-4 (File No. 333-254070) filed with the SEC on June 21, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021033268/ff42021a3_reeautomotive.htm#T803)\n\n4.3†\n\n[2021 REE Automotive Ltd. Share Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8 (File No. 333-261130) filed with the SEC on November 16, 2021.](https://www.sec.gov/Archives/edgar/data/0001843588/000121390021060120/ea147829ex10-1_reeautomotive.htm)\n\n4.4†\n\n[2021 REE Automotive Ltd. Employee Stock Purchase Plan, incorporated by reference to Exhibit 4.6 to the Company’s Shell Company Report on Form 20-F (File No. 001-40649) filed with the SEC on July 28, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021039131/ea144898ex4-6_reeautomotiv.htm)\n\n4.5†\n\n[REE Automotive Ltd. Key Employee Share Incentive Plan (2011) incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-8 (File No. 333-261130) filed with the SEC on November 16, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021060120/ea147829ex10-2_reeautomotive.htm)\n\n4.6†\n\n[Form of Director and Officer Indemnification Agreement, incorporated by reference to Exhibit 10.7 to Amendment No. 3 to the Company’s Registration Statement on Form F-4 (File No. 333-254070) filed with the SEC on June 21, 2021.](https://www.sec.gov/Archives/edgar/data/1843588/000121390021033268/ff42021a3ex10-7_reeauto.htm)\n\n4.7†\n\n[Compensation Policy for Directors and Officers, incorporated by reference to Annex A of Exhibit 99.1 to the Company’s Current Report on Form 6-K, filed with the SEC on October 9, 2025.](https://www.sec.gov/Archives/edgar/data/1843588/000121390025097817/ea026084901ex99-1_reeauto.htm)\n\n4.8\n\n[ATM Equity Offering](https://www.sec.gov/Archives/edgar/data/1843588/000121390022048392/ea164235ex1-2_reeautomotive.htm)[SM](https://www.sec.gov/Archives/edgar/data/1843588/000121390022048392/ea164235ex1-2_reeautomotive.htm)[Sales Agreement, dated August 16, 2022, between REE Automotive Ltd. and BofA Securities, Inc., incorporated by reference to Exhibit 1.2 to the Company’s Registration Statement on Form F-3 (File No. 333-266902) filed with the SEC on August 16, 2022.](https://www.sec.gov/Archives/edgar/data/1843588/000121390022048392/ea164235ex1-2_reeautomotive.htm)\n\n4.9\n\n[Form of At The Market Offering Agreement, dated July 14, 2023, between REE Automotive Ltd. and H.C. Wainwright & Co., LLC, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 6-K, filed with the SEC on July 14, 2023.](https://www.sec.gov/Archives/edgar/data/1843588/000121390023057095/ea181753ex10-1_reeautomotive.htm)\n\n4.10\n\n[Form of Securities Purchase Agreement, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 6-K, filed with the SEC on November 28, 2023.](https://www.sec.gov/Archives/edgar/data/1843588/000121390023090580/ea189076ex99-1_reeauto.htm)\n\n4.11\n\n[Form of Convertible Promissory Note, incorporated by reference to Exhibit 99.2 the Company’s Current Report on Form 6-K, filed with the SEC on November 28, 2023.](https://www.sec.gov/Archives/edgar/data/1843588/000121390023090580/ea189076ex99-2_reeauto.htm)\n\n4.12\n\n[Form of Ordinary Share Purchase Warrant, incorporated by reference to Exhibit 99.3 the Company’s Current Report on Form 6-K, filed with the SEC on November 28, 2023.](https://www.sec.gov/Archives/edgar/data/1843588/000121390023090580/ea189076ex99-3_reeauto.htm)\n\n4.13\n\n[Form of Securities Purchase Agreement, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 6-K, filed with the SEC on January 5, 2024.](https://www.sec.gov/Archives/edgar/data/1843588/000121390024001584/ea189608ex99-1_reeauto.htm)\n\n4.14\n\n[Form of Convertible Promissory Note, incorporated by reference to Exhibit 99.2 the Company’s Current Report on Form 6-K, filed with the SEC on January 5, 2024.](https://www.sec.gov/Archives/edgar/data/1843588/000121390024001584/ea189608ex99-2_reeauto.htm)\n\n4.15\n\n[Form of Ordinary Share Purchase Warrant, incorporated by reference to Exhibit 99.3 the Company’s Current Report on Form 6-K, filed with the SEC on January 5, 2024.](https://www.sec.gov/Archives/edgar/data/1843588/000121390024001584/ea189608ex99-3_reeauto.htm)\n\n4.16\n\n[Underwriting Agreement, dated March 1, 2024 by and between REE Automotive Ltd. and Roth Capital Partner, LLC, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 6-K, filed with the SEC on March 4, 2024.](https://www.sec.gov/Archives/edgar/data/1843588/000121390024019617/ea0201056ex1-1_reeauto.htm)\n\n150\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nExhibit NumberDescription\n\n4.17\n\n[Form of Pre-Funded Warrant, incorporated by reference to Exhibit 4.1 the Company’s Current Report on Form 6-K, filed with the SEC on September 17, 2024.](https://www.sec.gov/Archives/edgar/data/1843588/000121390024079521/ea021474101ex4-1_reeauto.htm)\n\n4.18\n\n[Form of Securities Purchase Agreement, dated September 15, 2024, by and between the Company and the purchaser parties thereto, incorporated by reference to Exhibit 10.1 the Company’s Current Report on Form 6-K, filed with the SEC on September 17, 2024.](https://www.sec.gov/Archives/edgar/data/1843588/000121390024079521/ea021474101ex10-1_reeauto.htm)\n\n4.19\n\n[Form of Securities Purchase Agreement, dated March 18, 2025, by and between the Company and the purchaser parties thereto, incorporated by reference to Exhibit 10.1 the Company’s Current Report on Form 6-K, filed with the SEC on March 19, 2025.](https://www.sec.gov/Archives/edgar/data/1843588/000121390025024818/ea023488201ex10-1_reeauto.htm)\n\n4.20\n\n[Placement Agency Agreement, dated March 18, 2025, by and between the Company and A.G.P./Alliance Global Partners, incorporated by reference to Exhibit 10.2 the Company’s Current Report on Form 6-K, filed with the SEC on March 19, 2025.](https://www.sec.gov/Archives/edgar/data/1843588/000121390025024818/ea023488201ex10-2_reeauto.htm)\n\n4.21\n\n[Form of Securities Purchase Agreement, dated March 26, 2025, by and between the Company and the purchaser parties thereto, incorporated by reference to Exhibit 10.1 the Company’s Current Report on Form 6-K, filed with the SEC on March 26, 2025.](https://www.sec.gov/Archives/edgar/data/1843588/000101376225002712/ea023568301ex10-1_reeauto.htm)\n\n4.22\n\n[Placement Agency Agreement, dated March 25, 2025, by and between the Company and A.G.P./Alliance Global Partners, incorporated by reference to Exhibit 10.2 the Company’s Current Report on Form 6-K, filed with the SEC on March 26, 2025.](https://www.sec.gov/Archives/edgar/data/1843588/000101376225002712/ea023568301ex10-2_reeauto.htm)\n\n4.23\n\n[Summary in English of the Lease Agreement, dated as of August 23, 2020 by and between the Registrant and Kibbutz Glil-Yam, incorporated by reference to Exhibit 4.23 to the Company’s Annual Report on Form 20-F field with the SEC on May 15, 2025.](https://www.sec.gov/Archives/edgar/data/1843588/000162828025025661/ex423summaryofhebrewlangua.htm)\n\n4.24*\n\n[Summary in English of the Letter Agreement to the Company’s Lease Agreement, dated as of April 7, 2026, by and between the Registrant and Kibbutz Glil-Yam.](ex424summaryofhebrewlangua.htm)\n\n8.1*\n\n[List of subsidiaries of REE Automotive Ltd.](ex81listofsubsidiariesofre.htm)\n\n10.1\n\n[Supply Chain Management Services Agreement, dated September 15, 2024, by and between the Company and Samvardhana Motherson International Limited, incorporated by reference to Exhibit 10.2 the Company’s Current Report on Form 6-K, filed with the SEC on September 17, 2024.](https://www.sec.gov/Archives/edgar/data/1843588/000121390024079521/ea021474101ex10-2_reeauto.htm)\n\n11.1*\n\n[Insider Trading Policy](ex111insidertradingpolicyf.htm)\n\n12.1*\n\n[Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002](ex121certificateofchiefexe.htm)\n\n12.2*\n\n[Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002](ex122certificateofchieffin.htm)\n\n13.1**\n\n[Certificate of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002](ex131certificateofchiefexe.htm)\n\n13.2**\n\n[Certificate of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002](ex132certificateofchieffin.htm)\n\n15.1*\n\n[Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, independent registered accounting firm for REE Automotive Ltd.](ex151consentofindependentr.htm)\n\n97.1\n\n[Clawback Policy, incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 20-F field with the SEC on March 27, 2024.](https://www.sec.gov/Archives/edgar/data/1843588/000162828024013211/ex971clawbackpolicy.htm)\n\n101.INSInline XBRL Instance Document\n\n101.SCHInline XBRL Taxonomy Extension Schema Document\n\n101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document\n\n101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document\n\n101.LABInline XBRL Taxonomy Extension Label Linkbase Document\n\n101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document\n\n104Cover Page Interactive Data File (embedded within the Inline XBRL document)\n\n____________\n\n* Filed herewith.\n\n** Furnished herewith.\n\n† Indicates a management contract or compensatory plan.\n\n151\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nSIGNATURES\n\nThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.\n\nREE Automotive Ltd.\n\nDate:May 15, 2026\n/s/ DANIEL BAREL\n\nDaniel Barel\n\nCo-Founder, Chief Executive Officer and Director\n\n152\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD.\n\nCONSOLIDATED FINANCIAL STATEMENTS\n\nAS OF DECEMBER 31, 2025\n\nU.S. DOLLARS IN THOUSANDS\n\nINDEX\n\nReport of Independent Registered Public Accounting Firm (PCAOB ID: 1281)\n\n[F-](#ib754f8dbfd9a410ebea6292869b01926_247)[2](#ib754f8dbfd9a410ebea6292869b01926_247)\n\nConsolidated Balance Sheets\n\n[F-](#ib754f8dbfd9a410ebea6292869b01926_250)[3](#ib754f8dbfd9a410ebea6292869b01926_250)\n\nConsolidated Statements of Comprehensive Loss\n\n[F-](#ib754f8dbfd9a410ebea6292869b01926_253)[4](#ib754f8dbfd9a410ebea6292869b01926_253)\n\nConsolidated Statements of Changes in Shareholders’ Equity\n\n[F-](#ib754f8dbfd9a410ebea6292869b01926_259)[5](#ib754f8dbfd9a410ebea6292869b01926_259)\n\nConsolidated Statements of Cash Flows\n\n[F-](#ib754f8dbfd9a410ebea6292869b01926_265)[6](#ib754f8dbfd9a410ebea6292869b01926_265)\n\nNotes to the Consolidated Financial Statements\n\n[F-](#ib754f8dbfd9a410ebea6292869b01926_268)[8](#ib754f8dbfd9a410ebea6292869b01926_268)\n\n#\n\nF-1\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the Shareholders and the Board of Directors of\n\nREE Automotive Ltd.\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheets of REE Automotive Ltd. and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of comprehensive loss, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.\n\nThe Company's Ability to Continue as a Going Concern\n\nThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses, negative cash flow from operations, and has stated that substantial doubt exists about the Company's ability to continue as a going concern. Management's evaluation of the events and conditions and management's plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\nOur audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n/S/ KOST FORER GABBAY & KASIERER\n\nA Member of EY Global\n\nWe have served as the Company’s auditor since 2015.\n\nTel-Aviv, Israel\n\nMay 15, 2026\n\nF-2\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nCONSOLIDATED BALANCE SHEETS\n\nU.S. dollar in thousands (except share and per share data)\n\nDecember 31,\n\n20252024\n\nASSETS\n\nCURRENT ASSETS:\n\nCash and cash equivalents$14,246 $72,262 \n\nAccounts receivable24 11 \n\nInventory— 3,075 \n\nOther accounts receivable and prepaid expenses691 7,158 \n\nTotal current assets14,961 82,506 \n\nNON-CURRENT ASSETS:\n\nNon-current restricted cash1,973 2,510 \n\nOther accounts receivable and prepaid expenses2,386 3,091 \n\nOperating lease right-of-use assets15,004 20,063 \n\nProperty and equipment, net3,857 22,110 \n\nTotal non-current assets23,220 47,774 \n\nTOTAL ASSETS$38,181 $130,280 \n\nLIABILITIES AND SHAREHOLDERS’ EQUITY\n\nCURRENT LIABILITIES:\n\nShort term loan$— $18,008 \n\nTrade payables1,736 5,602 \n\nOther accounts payable and accrued expenses7,337 7,966 \n\nOperating lease liabilities3,637 4,607 \n\nTotal current liabilities12,710 36,183 \n\nNON-CURRENT LIABILITIES:\n\nWarrants liability3,197 41,150 \n\nConvertible promissory notes4,830 14,758 \n\nDeferred tax liability— 1,782 \n\nOperating lease liabilities10,694 13,279 \n\nTotal non-current liabilities18,721 70,969 \n\nTOTAL LIABILITIES31,431 107,152 \n\nCommitments and Contingent Liabilities (Note 9)\n\nSHAREHOLDERS’ EQUITY:\n\nClass A Ordinary Shares of no par value: Authorized: 55,333,333 shares as of December 31, 2025 and 2024; Issued and outstanding: 28,743,914 and 19,478,877 shares as of December 31, 2025 and 2024, respectively\n— — \n\nClass B Ordinary shares of no par value: Authorized, issued and outstanding: 2,780,570 and 2,780,570 shares as of December 31, 2025 and 2024\n— — \n\nAdditional paid-in capital1,010,447 971,018 \n\nAccumulated deficit(1,003,697)(947,890)\n\nTotal shareholders’ equity6,750 23,128 \n\nTOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$38,181 $130,280 \n\n    The accompanying notes are an integral part of the consolidated financial statements.\n\nF-3\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nCONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS\n\nU.S. dollar in thousands (except share and per share data)\n\nYear ended December 31,\n\n202520242023\n\nRevenues$1,297 $183 $1,608 \n\nCost of revenues17,571 3,681 3,270 \n\nGross loss$(16,274)$(3,498)$(1,662)\n\nOperating expenses:\n\nResearch and development expenses, net45,432 49,460 82,662 \n\nSelling, general and administrative expenses19,988 26,171 35,568 \n\nOther expenses\n24,716 — — \n\nTotal operating expenses90,136 75,631 118,230 \n\nOperating loss$(106,410)$(79,129)$(119,892)\n\nIncome (Loss) from warrants remeasurement37,953 (22,750)396 \n\nFinancial income (expenses), net10,658 (7,812)3,928 \n\nNet loss before income tax(57,799)(109,691)(115,568)\n\nTaxes on income (tax benefit)(1,992)2,063 (1,360)\n\nNet loss$(55,807)$(111,754)$(114,208)\n\nNet comprehensive loss$(55,807)$(111,754)$(114,208)\n\nBasic and diluted net loss per Class A ordinary share$(1.74)$(7.01)$(11.32)\n\nWeighted average number of ordinary shares used in computing basic and diluted net loss per share32,140,321 15,933,291 10,087,691 \n\nThe accompanying notes are an integral part of the consolidated financial statements.\n\nF-4\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY\n\nU.S. dollar in thousands (except share and per share data)\n\nOrdinary shares - Class AOrdinary shares - Class BAdditional\nPaid-in\nCapitalAccumulated DeficitTotal Shareholders’ Equity\n\nSharesAmountSharesAmount\n\nBalance – January 1, 20238,135,348 $— 2,780,570 $— $897,337 $(721,928)$175,409 \n\nIssuance of Ordinary shares, net91,802 — — — 467 — 467 \n\nExercise of options, warrants and vesting of RSUs225,110 — — — 129 — 129 \n\nShare-based compensation— — — — 16,278 — 16,278 \n\nNet loss— — — — — (114,208)(114,208)\n\nBalance – December 31, 20238,452,260 $— 2,780,570 $— $914,211 $(836,136)$78,075 \n\nIssuance of Ordinary shares, net9,973,752 — — — 45,535 — 45,535 \n\nExercise of options and vesting of RSUs980,085 — — — 13 — 13 \n\nConversion of convertible note\n72,780 — 550 550 \n\nShare-based compensation— — — — 10,709 — 10,709 \n\nNet loss— — — — — (111,754)(111,754)\n\nBalance – December 31, 202419,478,877 $— 2,780,570 $— $971,018 $(947,890)$23,128 \n\nIssuance of Ordinary shares, net8,595,807 — — — 34,361 — 34,361 \n\nExercise of options and vesting of RSUs669,230 — — — 1 — 1 \n\nShare-based compensation— — — — 5,067 — 5,067 \n\nNet loss— — — — — (55,807)(55,807)\n\nBalance – December 31, 202528,743,914 $— 2,780,570 $— $1,010,447 $(1,003,697)$6,750 \n\nThe accompanying notes are an integral part of the consolidated financial statements.\n\nF-5\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nCONSOLIDATED STATEMENT OF CASH FLOWS\n\nU.S. dollar in thousands (except share and per share data)\n\nYear ended December 31,\n\n202520242023\n\nCash flows from operating activities:\n\nNet loss\n$(55,807)$(111,754)$(114,208)\n\nAdjustments to reconcile net loss to net cash used in operating activities:\n\nDepreciation3,090 3,182 2,255 \n\nAccretion income on short-term investments— — (731)\n\nShare-based compensation5,067 9,585 16,278 \n\nChange in fair value of warrants liability(37,953)22,750 (396)\n\nChange in fair value of derivative liability(11,751)9,143 (240)\n\nAmortization of discount of convertible promissory note883 476 30 \n\nInterest expenses932 872 81 \n\nDecrease (increase) in accrued interest on short-term investments— 895 (169)\n\nDecrease (increase) in inventory3,075 (3,412)(463)\n\nDecrease (increase) in accounts receivable(13)444 (455)\n\nDecrease (increase) in other accounts receivable and prepaid expenses5,269 (419)5,401 \n\nChange in operating lease right-of-use assets and liabilities, net1,065 390 2,123 \n\nIncrease (decrease) in trade payables(4,280)1,905 (901)\n\nIncrease (decrease) in other accounts payable and accrued expenses(1,230)(4,956)2,928 \n\nIncrease (decrease) in deferred tax liability(1,782)1,782 — \n\nDecrease in deferred revenue— — (943)\n\nImpairment of long-lived assets24,716 — — \n\nLoss from property and equipment sales and disposals9 132 137 \n\nNet cash used in operating activities(68,710)(68,985)(89,273)\n\nCash flows from investing activities:\n\nPurchase of property and equipment(6,305)(7,531)(3,745)\n\nProceeds from sale of property and equipment100 — — \n\nPurchases of short-term investments— — (94,364)\n\nProceeds from short-term investments— 43,500 147,726 \n\nNet cash provided by (used in) investing activities(6,205)35,969 49,617 \n\nCash flows from financing activities:\n\nProceeds from issuance of Ordinary Shares, net34,361 45,535 467 \n\nProceeds from exercise of options and warrants\n1 13 129 \n\nRepayment of short term loan(18,000)(15,000)— \n\nProceeds from short term loan— 18,000 15,000 \n\nProceeds from issuance of warrants— 15,000 3,633 \n\nProceeds from bifurcated embedded derivatives— — 4,179 \n\nProceeds from convertible note— — 563 \n\nNet cash provided by financing activities16,362 63,548 23,971 \n\nIncrease (Decrease) in cash, cash equivalents and restricted cash(58,553)30,532 (15,685)\n\nCash, cash equivalents and restricted cash at beginning of year74,772 44,240 59,925 \n\nCash, cash equivalents and restricted cash at end of period$16,219 $74,772 $44,240 \n\n    \n\nThe accompanying notes are an integral part of the consolidated financial statements.\n\nF-6\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nCONSOLIDATED STATEMENT OF CASH FLOWS\n\nU.S. dollar in thousands (except share and per share data)\n\nYear ended December 31,\n\n202520242023\n\nNon-cash activity:\n\nPurchase of property and equipment in trade payables and other accounts payable and accrued expenses$1,063 $48 $54 \n\nConversion of convertible notes$— $550 $— \n\nDerecognition of ROU assets and lease liabilities due to lease reassessment\n$1,023 $— $— \n\nShare settlement of employee liability$— $1,124 $— \n\nRight-of-use assets obtained in exchange for lease liabilities\n$343 $2,230 $1,097 \n\nTransfer from inventory to property and equipment, net\n$— $800 $— \n\nPrepaid purchases classified as property and equipment\n$1,903 $— $— \n\nYear ended December 31,\n\n202520242023\n\nSupplemental disclosure of cash flows information:\n\nCash paid for income taxes$79 $358 $995 \n\nInterest paid$27 $51 $— \n\nDecember 31, 2025December 31, 2024December 31, 2023\n\nReconciliation of cash, cash equivalents and restricted cash:\n\nCash and cash equivalents$14,246 $72,262 $41,232 \n\nNon-current restricted cash$1,973 $2,510 $3,008 \n\nTotal cash, cash equivalents and restricted cash$16,219 $74,772 $44,240 \n\nF-7\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 1. GENERAL\n\nREE Automotive Ltd. was incorporated in Israel on January 16, 2011.\n\nREE Automotive Ltd. is an automotive technology company. REE Automotive Ltd. has established wholly-owned subsidiaries in the United States, the United Kingdom, Germany and Japan (the “Subsidiaries”). REE Automotive Ltd. and its subsidiaries (the “Company” or “REE”) are in the early stages of commercialization and develop and produce software-defined vehicle (“SDV”) technology that manages vehicle operations and features through proprietarily-developed software.\n\nThe Company became a Nasdaq listed publicly traded company on July 23, 2021, through a merger agreement (the “Merger Agreement”) with 10X Capital Venture Acquisition Corp (“10X Capital”), a Delaware corporation and special purpose acquisition company (“SPAC”), and Spark Merger Sub, Inc., a wholly-owned subsidiary of the Company, pursuant to which Merger Sub merged with and into 10X Capital (the “Merger”). The Company’s Class A ordinary shares, without par value (the “Class A Ordinary Shares”) are trading under the ticker symbol “REE”. The Company also has Class B ordinary shares, without par value, having 10 votes per share (the “Class B Ordinary Shares” and together with the Class A Ordinary Shares, the “Ordinary Shares”) that include voting rights only and are not listed on the Nasdaq.\n\nIn March 2025, the Company completed two separate registered direct offerings in the total net proceeds of approximately $34.361 million (see also note 10, Shareholders Equity, for details).\n\nIn June 2025, the Company announced a Cost-Reduction-Plan. For the year ended on December 31, 2025 the Company incurred one-time expenses, in connection with its reduction-in-force under its Cost-Reduction-Plan, of $2,101 in connection with this plan.\n\nAs of December 31, 2025, the Company had cash and cash equivalents in the total amount of $14,246. The Company has incurred losses since inception and had negative cash flows used in operating activities of $68,710 for the year ended December 31, 2025. The Company expects to continue to incur net losses and negative cash flows from operating activities for the foreseeable future. The Company's ability to continue to operate is dependent upon raising additional funds to finance its activities. There are no assurances, however, that the Company will be successful in obtaining an adequate level of financing needed for the long-term operational and production activities. These conditions raise substantial doubts about the Company's ability to continue as a going concern. Absent any potential strategic transaction, additional revenues, further cost-reduction measures or additional funding, the Company currently estimates that its existing financial resources will be sufficient to fund its projected operating costs and expected cash requirements into, but not beyond, the middle or the end of the second quarter of 2026. Management is actively pursuing additional financing opportunities, including through discussions with existing shareholders, as well as strategic transactions and further cost-reduction initiatives in order to extend the Company’s liquidity runway. However, there can be no assurance that such efforts will be successful or available on acceptable terms. If the Company is unable to obtain additional funding, consummate strategic transactions, generate additional revenues or further reduce costs, the Company may need to significantly curtail or modify our operations and strategic plans.\n\nThe consolidated financial statements do not include any adjustments with respect to the carrying amounts of assets and liabilities and their classification that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.\n\nF-8\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\n\nThe consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).\n\nUse of estimates\n\nThe preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions.\n\nThese estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and expenses during the reporting period and accompanying notes. Actual results could differ from those estimates. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.\n\nFinancial statements in U.S. dollars\n\nThe currency of the primary economic environment in which REE Automotive Ltd. and its subsidiaries operate is the U.S. dollar. Thus, the functional and reporting currency of the Company is the U.S. dollar.\n\nAccordingly, foreign currency assets and liabilities are remeasured into U.S. dollars at the end-of-period exchange rates except for non-monetary assets and liabilities, which are measured at historical exchange rates. Revenue and expenses are remeasured each day at the exchange rate in effect on the day the transaction occurred.\n\nPrinciples of consolidation\n\nThe consolidated financial statements include the accounts of REE Automotive Ltd. and its subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.\n\nCash and cash equivalents\n\nCash and cash equivalents consist of cash in banks, bank deposits and money market funds, that have a maturity, at the date of purchase, of three months or less.\n\nInventory\n\nThe Company’s inventory, which includes raw materials, work in-process, and finished goods, is carried at the lower of cost or Net Realizable Value (“NRV”). Inventory cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis. In the case of produced inventories and work in progress, cost includes an appropriate share of production overheads based on operating capacity.\n\nAt the end of each reporting period, the Company evaluates whether its inventories are damaged, obsolete, or have material changes in price or other causes, and if so, a loss is recognized in the period in which it occurs. Inventory write-downs are also based on reviews for any excess or obsolescence.\n\nThe Company also reviews its inventory to determine whether its carrying value exceeds the NRV upon the ultimate sale of the inventory. NRV is the estimated selling price of inventory in the ordinary course of business, less estimated costs of completion, disposal, and transportation. At the end of each reporting period, the Company determines the estimated selling price of its inventory based on market conditions. Once inventory is written-down, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. For the year ended December 31, 2025, the Company recorded inventory write-downs in the amount of $15,936 (see also note 3, Inventory).\n\nF-9\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nNon-current Restricted cash\n\nNon-current restricted cash represent restricted bank deposits which are primarily used as a security for the Company’s operating lease agreements.\n\nImpairment for long-lived assets\n\nLong-lived assets of the Company are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.\n\nRecoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.\n\nFor the year ended December 31, 2025, the Company recorded impairment charges of long-lived assets in the amount of $24,277 . No impairment charges were recorded for the years ended December 31, 2024 and 2023.\n\nLeases\n\nThe Company determines if an arrangement is a lease at inception in accordance with ASC 842, Leases. The Company currently does not have any finance leases.\n\nOperating lease right-of-use (“ROU”) assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. Operating lease ROU assets also include any prepaid lease payments. Some of the leases contain variable lease payments, including payments based on a Consumer Price Index (“CPI”). Variable lease payments based on a CPI are initially measured using the index in effect at lease inception, and will not be subsequently adjusted, unless the liability is reassessed for other reasons. Additional payments based on the change in a CPI are recorded as a period expense when incurred. For short-term leases with a term of 12 months or less, operating lease ROU assets and liabilities are not recognized and the Company records lease payments in the Consolidated Statements of Operations on a straight-line basis over the lease term.\n\nThe implicit rate within the operating leases is generally not determinable, therefore the Company uses the Incremental Borrowing Rate (“IBR”) based on the information available at commencement date in determining the present value of lease payments. The Company’s IBR was estimated to approximate the interest rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset was located.\n\nFor the years ended on December 31, 2025, 2024 and 2023 the Company recorded loss from leases termination in the amount of $439, zero and zero, respectively.\n\nF-10\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nProperty and equipment, net\n\nProperty and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets below:\n\nYears\n\nComputers and software3—7\n\nFurniture and fixtures5\n\nMachinery and equipment4—7\n\nVehicles7\n\nDemonstration vehicles\n2\n\nLeasehold improvementsShorter of the term of the lease or useful life\n\nPre-production costs related to long-term supply agreements\n\nThe Company incurred pre-production engineering, development and tooling costs related to products produced for its customers under future potential long-term supply agreements. Engineering, testing and other costs incurred in the design and development of production parts will be expensed as incurred.\n\nResearch and development, net\n\nResearch and development costs include personnel-related expenses associated with the Company’s engineering personnel and consultants responsible for the design, development and testing of its products and allocated overhead. Research and development costs are expensed as incurred and are presented net of the amount of any grants the Company receives for research and development in the period in which the grant was received.\n\nGrants\n\nOn August 19, 2021, the Company was awarded approximately $12,272 (£10,141) as part of a total $15,002 (£12,397) grant from the UK government. This grant is part of a $49,571 (£40,963) investment, coordinated through the Advanced Propulsion Centre (‘APC’), in which REE will contribute approximately $46,397 (£38,340). The project runs from November 1, 2021 until July 2024. Funds spent on the project are claimed the month after each three month period and paid in the following month. The Company recognized APC’s participation in research and development as a reduction from research and development expenses in the amount of zero, $3,636 and $4,667 for the years ended December 31, 2025, 2024 and 2023, respectively.\n\nF-11\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nIsraeli severance pay\n\nPursuant to Section 14 of Israel’s Severance Compensation Law, 1963 (“Section 14”), the Israeli entity’s employees are included under this section and entitled only to monthly deposits at a rate of 8.33% of their monthly salary, made on their behalf with insurance companies. Payments in accordance with Section 14 release REE Automotive Ltd. from any future severance payments in respect of those employees. As a result, the related obligation and amounts deposited on behalf of such obligation are not stated on the balance sheet, as the Company is legally released from severance obligation to employees once the amounts have been deposited, and the Company has no further legal ownership on the amounts deposited.\n\nFor the years ended December 31, 2025, 2024, and 2023, severance pay expenses amounted to $996, $987, and $1,069, respectively.\n\nEmployee benefit plan – Defined contribution plan\n\nThe Company maintains a defined contribution 401(k) retirement savings plan for its U.S. employees. Each participant in the 401(k) retirement savings plan may elect to contribute a percentage of his or her annual compensation up to a specified maximum amount allowed under U.S. Internal Revenue Service regulations. The Company matches employee contributions to a maximum of 4% of the participant annual compensation. For the years ended December 31, 2025, 2024, and 2023 the employer expenses related to the match amounted to $43, $81, and $106 respectively.\n\nThe Company maintains a privately administered pension insurance plan in the United Kingdom. Contributions to the plan are recognized as employee benefit expense when due. For the years ended December 31, 2025, 2024 and 2023, the Company matched employee contributions to a maximum of 6% of base salary of the participant annual compensation. For the years ended December 31, 2025, 2024 and 2023 the employer expenses related to the match amounted to $442, $515 and $538, respectively.\n\nWarranty liability\n\nWarranty liability provided to customers is accrued in accordance with management’s estimate. No material claims were incurred for the years ended December 31, 2025, 2024 and 2023.\n\nAs of December 31, 2025, there was no warranty liability. As of December 31, 2024, the warranty liability amount was immaterial.\n\nConcentration of credit risk\n\nFinancial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and non-current restricted cash.\n\nThe Company maintains its cash, cash equivalents and non-current restricted cash with high-quality financial institutions mainly in Israel, the U.S. and the U.K., and regularly monitors their composition and maturities.\n\nThe Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts and option contracts.\n\nF-12\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nStock-based compensation\n\nThe Company accounts for share-based compensation to employees and non-employees in accordance with ASC 718, “Compensation — Stock Compensation”, (“ASC 718”), which requires companies to estimate the fair value of equity-based payment awards on the date of grant based on the fair value of the awards granted.\n\nThe Company grants awards that vest upon the satisfaction of service condition.\n\nFor graded-vesting awards with no performance or market conditions, the Company recognizes the related share-based compensation expense on a straight-line basis over the requisite service period of the awards. The Company accounts for forfeitures as they occur.\n\nThroughout the fiscal years ended December 31, 2024 and 2023 the Company has granted options with exercise price of up to $0.03. Throughout the fiscal year ended December 31, 2025 the Company did not grant options. The grant date fair value of the awarded options is measured based on the closing market price of the Company's Class A Ordinary shares on or immediately before the date of grant.\n\nThe Company measures the grant date fair value of its Restricted Share Units (“RSUs”) based on the closing market price of the Class A Ordinary share on or immediately before the date of grant.\n\nF-13\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nFair value of financial instruments\n\nFair value is defined as the exchange price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.\n\nA financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:\n\nLevel 1 — quoted prices in active markets for identical assets or liabilities.\n\nLevel 2 — inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.\n\nLevel 3 — unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.\n\nFinancial instruments consist, among others, of cash equivalents, other accounts receivable and prepaid expenses, short-term loan, trade payables and other accounts payable and accrued expenses. These financial instruments are stated at their carrying value, which approximates their fair value due to the short time to the expected receipt or payment date. The Company considers its pre-funded warrants to be Level 2. The warrants and derivative liabilities are measured at fair value using Level 3 inputs (see also Note 13, Note 14 and Note 15).\n\nConvertible Promissory Notes\n\nThe Company applies ASC 470-20, “Debt with Conversion and Other Options” (“ASC 470-20”). In accordance with ASC 470-20 the Company first allocates the proceeds to freestanding liability instrument that are measured at fair value at each reporting date, based on their fair value. The remaining proceeds are allocated between the convertible debt and any bifurcated embedded derivatives. In accordance with ASC 815 “Derivatives and Hedging” (“ASC 815”), the Company bifurcates embedded derivatives that require bifurcation and accounts for them separately from the convertible debt.\n\nThe Company applies ASC 815, “Derivatives and Hedging” to all features related to convertible debt. When features meet the definition of a derivative, are not clearly and closely related to the characteristics of the convertible debt, and do not qualify for any scope exceptions within ASC 815, they are required to be accounted for separately from the debt instrument and recorded as derivative instrument liabilities. The fair value assigned to the embedded derivative instruments is marked to market in each reporting period. The Company has recorded embedded derivative liabilities related to the convertible promissory notes. Bifurcated embedded derivatives are presented in the same line item as the host debt instrument.\n\nFor further information regarding the convertible promissory notes, see Note 13.\n\nF-14\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nWarrants liability\n\nThe Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance. The assessment considers whether the warrants and pre-funded warrants are freestanding financial instruments, meet the definition of a liability under ASC 480, are indexed to the Company’s own shares and whether the warrants are eligible for equity classification under ASC 815-40. This assessment is conducted at the time of warrant issuance and as of each subsequent reporting period end date while the warrants are outstanding.\n\nWarrants that meet all the criteria for equity classification, are required to be recorded as a component of additional paid-in capital. Warrants that do not meet all the criteria for equity classification, are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value through earnings at each balance sheet date thereafter.\n\nThe Company classified the warrants and pre-funded warrants as a liability pursuant to ASC 815-40 since they do not meet the equity classification conditions. Accordingly, the Company measured the warrants and pre-funded warrants at their fair value. The warrants and pre-funded warrants liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of comprehensive loss.\n\nFor information regarding the Company's outstanding warrants, see Note 14.\n\nBasic and diluted loss per share\n\nThe Company’s basic net loss per share is calculated by dividing net loss attributable to Class A Ordinary shares by the weighted-average number of shares of Class A Ordinary shares outstanding for the period, without consideration of potentially dilutive securities. The diluted net loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method or the if-converted method based on the nature of such securities. Diluted net loss per share is the same as basic net loss per share in periods when the effects of potentially dilutive shares of Ordinary shares are anti-dilutive. The Company’s Class B Ordinary shares include voting rights only and therefore are excluded from the loss per share calculation.\n\nThe potentially dilutive securities that were excluded from the computation for the years ended December 31, 2025, 2024 and 2023 were 6,722,334, 7,455,172 and 2,679,771, respectively, because including them would have been anti-dilutive.\n\nIncome taxes\n\nThe Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between the financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.\n\nThe Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value, and if it is more likely than not that a portion or all of the deferred tax assets will not be realized.\n\nASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard contains a two-step approach to recognizing and measuring a liability for uncertain tax positions.\n\nF-15\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nThe first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (on a cumulative basis) likely to be realized upon ultimate settlement.\n\nRevenue recognition\n\nUnder ASC 606 “Revenue from contracts with customers”, the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for contracts that are within the scope of the standard, the Company perform the following five steps: (1) Identify the contract(s) with a customer, (2) Identify the performance obligations in the contract, (3) Determine the transaction price, (4) Allocate the transaction price to the performance obligations in the contract and (5) Recognize revenue when (or as) the entity satisfies a performance obligation.\n\nThe Company recognizes revenue at the time when its customer obtains control of the promised goods which is when the performance obligation is satisfied by transferring the promised product to the customer. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities (e.g., sales tax and other indirect taxes). The Company does not offer right of return to its contracts.\n\nThe transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring the products to the customer.\n\nPayment terms generally are up to 30 days. The Company applies the practical expedient and does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.\n\nFor contracts in which the performance obligation has an original expected duration of one year or less, the Company does not provide disclosure on its remaining performance obligations.\n\nDeferred revenues are recognized as (or when) the Company receives consideration prior to performing its obligations under the contract.\n\nIn April 2021, the Company entered into a strategic development agreement with a customer, pursuant to which the Company agreed to develop and supply REE platform prototypes. Revenue related to the agreement was deferred and will be recognized upon satisfying performance obligations in the contract. The Company’s contracts with customer prepayment terms do not include a significant financing component because the primary purpose is not to receive financing from the customers. For the year ended December 31, 2023, the Company recorded revenues in the amount of $943 upon the termination of the agreement with the customer and recorded capitalized expenses in the amount of $943 in cost of revenues.\n\nIn addition, for the years ended December 31, 2025, 2024 and 2023 the Company recorded revenues from sales of SDV prototypes in the aggregate amount of zero, $183 and $665, respectively. Revenue from sales of SDV prototypes is recognized at a point in time when the control of the goods is transferred to the customer, upon delivery. For the year ended December 31, 2025, the Company recorded revenues from SDV development services in the amount of $1,297. Revenue from SDV development services is recognized over time as the services are rendered, based on the progress toward completion of the performance obligations. During the year ended December 31, 2025, the Company provided SDV engineering and development services to certain costumers, including engineering, planning and system integration activities, and recognized revenue of $1,297 upon achievement of contractually defined milestones.\n\nF-16\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nCost of revenues\n\nCost of revenues primarily comprised from the cost of SDVs and includes direct parts, material and labor costs, share-based compensation expenses, production overhead (e.g., depreciation of machinery and tooling), shipping and logistics costs, and reserves including for estimated warranty costs related to the production of SDVs and adjustments to write down the carrying value of inventory when it exceeds its estimated NRV.\n\nSegment information\n\nThe Company identifies operating segments in accordance with ASC Topic 280, “Segment Reporting” as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision Maker (\"CODM\"), or decision-making group, in making decisions regarding resource allocation and evaluating financial performance. The Company operates in one operating and reportable segment. Financial information is evaluated regularly by the CODM, who is the Company’s CEO, in deciding how to allocate resources and assessing performance. The Company’s CODM allocates resources and assesses performance based upon discrete financial information at the consolidated level.\n\nR&D tax credit\n\nThe research & development (R&D) tax credit in the United Kingdom is a United Kingdom tax relief designed to encourage innovation and increase spending on R&D activities for companies operating in the United Kingdom. This is relevant to the Company’s subsidiary engineering center in the United Kingdom. Generally, the United Kingdom R&D tax credit offsets the income tax to be paid and the remaining portion (if any) will be refunded. The R&D tax credit is calculated based on the claimed volume of eligible R&D expenditures by the Company. As a result, the R&D tax credit is presented as a deduction from “research and development expenses” in the consolidated statements of income (loss). During the years ended December 31, 2025, 2024 and 2023, the Company recorded R&D tax credit benefits in the amount of $2,368, $5,697 and $769, respectively.\n\nRecently adopted accounting pronouncements\n\nAs an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflect this election.\n\nIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 during the year ended December 31, 2025, on a prospective basis. The adoption of this ASU affected only the Company’s disclosures to its consolidated financial statements (see note 12).\n\nF-17\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)\n\nRecently issued accounting pronouncements, not yet adopted\n\nIn November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.\n\nIn July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This amendment introduces a practical expedient for the application of the current expected credit loss (“CECL”) model to current accounts receivable and contract assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the timing of adoption and impact of this amendment on its consolidated financial statements and related disclosures.\n\nIn December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This update establishes the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-10.\n\nIn December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) - Narrow-Scope Improvements. The ASU was updated to improve the navigability of the required interim disclosures within ASC No. 270 and to clarify when the guidance applies. This ASU is not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The amendments in this ASU are required to be adopted for interim reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied either through a prospective or retrospective approach. The Company is currently evaluating the effect of adopting the ASU on its condensed consolidated financial statement disclosures.\n\nF-18\n\n[Table of Contents](#ib754f8dbfd9a410ebea6292869b01926_7)\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 3. INVENTORY\n\nInventory consisted of the following at December 31, 2025 and 2024, respectively:\n\nDecember 31, 2025December 31, 2024\n\nRaw materials and work in progress$— $3,075 \n\nTotal inventory\n$— $3,075 \n\nDuring the years ended December 31, 2025, 2024 and 2023 the Company recorded inventory write-downs of $15,936, $2,276 and $1,970 respectively, to reduce inventories to their net realizable values and for any excess or obsolete inventories.\n\nNOTE 4. OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES\n\nOther current accounts receivable and prepaid expenses consisted of the following at December 31, 2025 and 2024, respectively:\n\nDecember 31, 2025December 31, 2024\n\nGovernment authorities$355 $1,501 \n\nPrepaid expenses275 1,037 \n\nAdvances to suppliers5 4,587 \n\nOther receivables56 33 \n\nTotal$691 $7,158 \n\nF-19\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 5. LEASES\n\nThe Company's lease agreements include offices and production facilities, as well as leases for vehicles and other equipment, all classified as operating leases. Certain leases include renewal options that are under the Company`s sole discretion. The renewal options were included in the right-of-use assets and liabilities calculations if it was reasonably certain that the Company will exercise the option.\n\nDecember 31, 2025December 31, 2024December 31, 2023\n\nOperating lease cost$4,687 $4,046 $3,598 \n\nShort-term lease cost177 146 165 \n\nVariable lease cost261 193 170 \n\nSublease income$(975)$(572)$— \n\nTotal lease cost$4,150 $3,813 $3,933 \n\nDecember 31, 2025December 31, 2024December 31, 2023\n\nOperating cash flows for operating leases, net:$4,964 $4,254 $2,976 \n\nWeighted average remaining operating lease term (years)6.106.267.39\n\nWeighted average discount rate operating lease6.62 %6.55 %6.04 %\n\nThe following table outlines maturities of the Company’s lease liabilities as of December 31, 2025:\n\nOperating Leases\n\n2026$3,435 \n\n20272,502 \n\n20282,457 \n\n20292,458 \n\n20302,465 \n\n2031 and thereafter4,463 \n\nTotal undiscounted lease payments$17,780 \n\nLess:\n\nImputed interest3,449 \n\nPresent value of lease liabilities$14,331 \n\nFor the years ended on December 31, 2025, 2024 and 2023 the Company recorded loss on lease termination in the amount of $439, zero and zero, respectively.\n\nFor information regarding developments subsequent to the reporting date related to the Company’s lease agreements in the UK and the U.S., see Note 20, Subsequent Events.\n\nF-20\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 6. PROPERTY AND EQUIPMENT, NET\n\nProperty and equipment, net at December 31, 2025 and 2024, respectively, consists of:\n\nDecember 31, 2025December 31, 2024\n\nComputers and software$4,211 $4,208 \n\nFurniture and fixtures1,286 1,291 \n\nMachinery and equipment3,442 14,011 \n\nVehicles— 173 \n\nDemonstration vehicles 720 800 \n\nLeasehold improvements1,308 1,308 \n\nConstruction in progress (1)\n— 7,123 \n\n$10,967 $28,914 \n\nLess - accumulated depreciation and amortization(7,110)(6,804)\n\nTotal$3,857 $22,110 \n\n(1)     Construction in progress as of December 31, 2024, consisted of capitalized costs of production tooling, machinery and equipment related to the UK Launch Factory located in Coventry, United Kingdom and assembly facility located in the United States.\n\nDepreciation expenses of property and equipment were $3,090, $3,182, and $2,255 for the years ended December 31, 2025, 2024, and 2023, respectively.\n\nThroughout the years ended December 31, 2025 and 2024, a total cost of $330 and $208, respectively, and a total accumulated depreciation of $221 and $76, respectively, were disposed from the consolidated balance sheets.\n\nDuring the year ended December 31, 2025, the Company identified events and changes in circumstances indicating that the carrying value of certain long-lived assets may not be recoverable and, accordingly, performed impairment assessments in accordance with ASC 360, as described in note 2 and note 15. Upon completion of such assessments, the Company impaired certain property, plants and equipment, including, but not limited to, machinery, equipment and assets under construction. For the year ended December 31, 2025, the Company recorded impairment charges of long-lived assets in the amount of $24,277, presented under other expenses.\n\nF-21\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 7. CREDIT FACILITY\n\nOn August 14, 2023, the Company entered into an agreement with a leading Israeli commercial bank to establish a revolving credit line facility (the “Credit Facility”) in the amount of $15,000 which the bank is committed to until December 31, 2024. In December 2023, the terms of the Credit Facility were extended through June 30, 2025. In March 2024, the terms of the credit facility were extended through December 31, 2025. Outstanding loans under the Credit Facility bear a variable interest at the rate of Monthly Term Secured Overnight Financing Rate (“SOFR”) plus an annual margin of 3.5%. The interest is payable on a monthly basis. Under the terms of the Credit Facility, the Company is required to keep unsecured deposits in the aforementioned bank in the amount of $20,000. In November 2024, the agreement was amended to increase the Credit Facility amount to $18,000 while the unsecured deposit amount was reduced to $18,000. Under certain terms, the bank has the right to offset loans drawn under the Credit Facility with the deposits kept in the bank. The Company is charged a fee of 0.25% per annum on amounts available for draw that are undrawn under the Credit Facility.\n\nAs of December 31, 2025 and 2024 the Company has utilized zero and $18,000, respectively, under the Credit Facility for a short term loan. In January 2025, the short term loan was fully repaid by the Company. As of December 31, 2024 the annual interest rate for the loan utilized under the Credit Facility was 7.86%. The Credit Facility expired on December 31, 2025 and was not renewed thereafter.\n\nFor the years ended December 31, 2025 and 2024, the Company recorded interest expenses in the amount of $19 and $41, respectively.\n\nNOTE 8. OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES\n\nOther accounts payables and accrued expenses consisted of the following at December 31, 2025 and 2024, respectively:\n\nDecember 31, 2025December 31, 2024\n\nEmployees and payroll accruals$4,125 $5,821 \n\nProfessional fees386 128 \n\nNon recurring engineering585 417 \n\nGovernment authorities70 261 \n\nOther payables2,171 1,339 \n\nTotal$7,337 $7,966 \n\nF-22\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 9. COMMITMENTS AND CONTINGENT LIABILITIES\n\nCommitments\n\nThe following table summarizes REE’s contractual obligations and other commitments for cash expenditures as of December 31, 2025, and the years in which these obligations are due. Certain obligations are reflected in the balance sheet, while other are disclosed as future obligations. This table is not meant to represent a forecast of the Company’s total cash expenditures for any of the periods presented.\n\nPurchase commitments\n\n2026$1,603 \n\nTotal$1,603 \n\nOpen purchase orders that are cancellable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above. Such purchase orders often represent authorizations to purchase rather than binding agreements.\n\nGuarantee\n\nA long-term guarantee was issued by a bank in the amount of approximately $1,973 was recorded within non-current restricted cash to secure the Company’s office and production locations. See also note 20, subsequent events.\n\nRoyalty bearing grants\n\nUntil 2018, the Company’s research and development efforts had been partially financed through grants from the Israeli Innovation Authority (“IIA”) for the technology related to the Softwheel legacy activity. Under the research and development agreements with the IIA, if the Company does not generate revenues from products developed with funds provided by the IIA, the Company is not obligated to pay royalties or repay the grants. As of December 31, 2025, the Company’s remaining contingent obligation with respect to royalty-bearing participation received or accrued, net of royalties paid or accrued, were $741. Since the Company does not anticipate generating revenues from products developed with funds provided by the IIA, except with respect to a change of control transaction, transfer of assets, or similar transaction, which may trigger repayment under certain facts and circumstances, it does not expect to make any repayments to the IIA.\n\nIn 2018, the Company signed a research and development agreement with the Israel-United States Binational Industrial Research and Development Foundation (“BIRD”). Under this agreement, if the Company does not generate revenues from products developed with funds provided by the BIRD, the Company is not obligated to pay royalties or repay the grants. As of December 31, 2025, the BIRD contingent liability with respect to royalty-bearing participation received or accrued, net of royalties paid or accrued, totaled $433. Since the Company does not anticipate to generating revenues from products developed with funds provided by the BIRD, except in the event of a proposed transfer of ownership of intellectual property, and/or technology relating to products developed with funds provided by the BIRD and/or the products themselves, which may trigger repayment under certain facts and circumstances, it does not expect to make any repayments to the BIRD.\n\nF-23\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 9. COMMITMENTS AND CONTINGENT LIABILITIES (cont.)\n\nLegal proceedings\n\nOn December 16, 2022, a lawsuit was filed to the court in Texas, Austin Division, against REE and its US subsidiaries (in this section, the “Group”), by OSR Group alleging that the Group stole OSR Group’s trade secrets. The OSR Group requested the court to grant them the following: (a) a request for an injunction pertaining to the use of such trade secrets; (b) affirmative action to protect the OSR Group’s alleged trade secrets; (c) the establishment of a constructive trust to transfer all the relevant Group’s legal title and intellectual property to the OSR Group; (d) an award to the OSR Group of monetary damages in an amount of no less than USD 2.6 billion together with exemplary damages in an amount of no less than USD 5.2 billion, such amounts to be determined in the trial, plus interest; (e) an award to the OSR Group for all of its expenses relating to the action; (f) an award to the OSR Group of pre-judgment interest on all damages; and (g) an award of other relief as the court deem fit. On January 4, 2024, the Magistrate Judge entered a Report and Recommendation (“Report”), recommending dismissal of the lawsuit based on forum non conveniens, such that OSR could pursue its claims in an Israeli forum rather than in the United States, assuming that OSR chooses to do so after dismissal. On August 26, 2024, the District Judge adopted the Report, granting REE’s motion to dismiss for forum non conveniens and ordering the clerk of the court to close the case. On September 26, 2024, OSR filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit, appealing the District Judge’s adoption of the Report and dismissal of the case for forum non conveniens. On October 10, 2025, the Fifth Circuit affirmed the District Court’s dismissal for forum non conveniens. On November 12, 2025, the Fifth Circuit denied OSR’s petition for rehearing. On February 10, 2026, the deadline for OSR to seek appellate review before the U.S. Supreme Court expired. To the Company’s knowledge, OSR did not file a motion requesting an extension of time to pursue such review. As of December 31, 2025 and December 31, 2024 the Company did not record a loss contingency.\n\nOn August 27, 2025, Schwab Industries, Inc. filed a demand for arbitration with the American Arbitration Association in Michigan against the Company and its U.S. subsidiary, alleging failure to pay amounts purportedly due under a contract. The Company has asserted counterclaims alleging, among other things, mismanagement, unauthorized price increases, errors, unjustified advance payment requests, and failure to perform under the contract. On April 16, 2026, the parties entered into a settlement agreement under which the Company agreed to make a payment to Schwab in exchange for a release of the relevant parties from all claims. Accordingly, as of December 31, 2025 the Company recorded a loss contingency.\n\nNotwithstanding the foregoing, from time to time, REE may become involved in actions, claims, suits, and other legal proceedings, such as requests to disclose information before initiating derivative cases, arising in the ordinary course of the Company's business, including but not limited to claims related to employment, intellectual property and shareholder matters.\n\nF-24\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 10. SHAREHOLDERS’ EQUITY\n\nShare split\n\nOn October 18, 2023, the Company effected a reverse share split of the Company’s Class A ordinary shares and Class B ordinary shares at the ratio of 1-for-30, such that (i) each thirty (30) Class A ordinary shares, without par value, were consolidated into one (1) Class A ordinary share, without par value and (ii) each thirty (30) Class B ordinary shares, without par value, were consolidated into one (1) Class B ordinary share, without par value. As a result, all Ordinary Class A shares, Ordinary Class B shares, options for Ordinary Class A Shares, exercise price and net loss per share amounts were adjusted retroactively for all periods presented in these consolidated financial statements as if the stock reverse split had been in effect as of the date of these consolidated financial statements. Following the reverse share split an additional amount of 15,890 shares was issued to reflect rounding differences resulting from fractional Class A ordinary shares.\n\nOrdinary shares rights\n\nEach Class A Ordinary Share has the right to exercise one vote, to participate pro rata in all the dividends declared by the Board of Director’s of the Company and the rights in the event of the Company’s winding up are to participate pro-rata in the total assets of the Company.\n\nClass B Ordinary Shares, which are held by the founders, are entitled to cast ten votes per each Class B Ordinary Share held as of the applicable record date. Specific actions set forth in REE’s Amended and Restated Articles may not be effected by REE without the prior affirmative vote of 100% of the outstanding REE Class B Ordinary Shares, voting as a separate class. Each Class B Ordinary Shares will be automatically suspended upon the tenth anniversary of the closing of the Merger. There are no economic or participating rights to this class of shares.\n\nEquity transactions\n\na.On July 14, 2023, the Company entered into the H.C. Wainwright Agreement with H.C. Wainwright, pursuant to which the Company may offer and sell, at its option, up to $35,000 of Class A Ordinary Shares through an “at-the-market” equity program under which H.C. Wainwright act as the Company’s sales agent. Throughout the years ended December 31, 2025 and 2024, the Company sold zero and 310,822 Class A Ordinary Shares, respectively, under the ATM Sales Agreement for total net proceeds of zero and $235, respectively.\n\nb.On March 1, 2024, the Company executed an underwriting agreement (the “Underwriting Agreement”) between the Company and Roth Capital Partners LLC (the “Underwriter”) pursuant to which the Company conducted an underwritten public offering (the “Public Offering”) of 2,000,000 Class A Ordinary Shares, no par value per share (the “Ordinary Shares”), at a purchase price of $6.50 per share, for aggregate gross proceeds of approximately $13,000. Pursuant to the terms of the Underwriting Agreement, the Company has also granted the Underwriter a 20-day option to purchase Ordinary Shares of up to 300,000 Ordinary Shares, or 15% of the number of Ordinary Shares sold in the Public Offering, solely to cover over-allotments, if any. On March 4, 2024, the Underwriter exercised its overallotment option to purchase an additional 300,000 Ordinary Shares in full. The Public Offering, including the shares issuable upon the exercise of the overallotment option, closed on March 5, 2024 (the “Closing Date”). At Closing Date, the Company issued 2,300,000 Ordinary Shares, for aggregate net proceeds of approximately $14,135 to the Company, after deducting the underwriting discounts and transaction costs payable by the Company.\n\nc.On September 15, 2024, the Company has entered into Securities Purchase Agreements (the \"SPAs\") with certain investors for the issuance of 7,362,930 of its Class A Ordinary Shares at a price of $4.122 per share. In lieu of Class A Ordinary Shares, certain investors purchased pre-funded warrants exercisable into 3,639,893 Class A Ordinary Shares at a purchase price of $4.121 per pre-funded warrant. The purchase price per share of each pre-funded warrant represents the per share offering price of $4.122 per Class A Ordinary Share, minus the $0.001 per share exercise price of such pre-funded warrant. The total net proceeds were approximately $44,877 after deducting transaction costs, of which $29,877 was recorded in the additional paid-in capital and the reminder was recorded as pre-funded warrants liability.\n\nF-25\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 10. SHAREHOLDERS’ EQUITY (cont.)\n\nFor further information, see Note 14 (c).\n\nd.On December 23, 2024, the Company issued 72,780 Class A Ordinary Shares as a result of the partial conversion of the Convertible Notes, as described in Note 13.\n\ne.During March 2025, the Company conducted two separate registered direct offerings with certain institutional and accredited investors, providing for a combined issuance of an aggregate of 8,595,807 Class A Ordinary Shares, no par value per share. The Company sold its Class A Ordinary Shares in both offerings at a purchase price of $4.25 per ordinary share, resulting in aggregate gross proceeds of approximately $36.532 million and net proceeds of approximately $34.361 million after deducting each of the respective placement agent fees and other estimated offering expenses payable by the Company.\n\nF-26\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 11. SHARE-BASED COMPENSATION\n\nShare option plan\n\nIn July 2021, the Board of Directors approved the REE Automotive Ltd. 2021 Share Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the grant of options, ordinary shares, restricted shares, restricted share units (“RSUs”), stock appreciation rights, other cash-based awards, and other share-based awards which may be granted to employees, officers, non-employee consultants and directors of the Company. The Shares reserved under the 2021 Plan will automatically increase on January 1 of each year during the term of the 2021 Plan, commencing on January 1 of the year following the year in which the 2021 Plan became effective, in an amount equal to 5% of the total number of Class A Ordinary shares, as defined in the 2021 Plan, on December 31 of the preceding calendar year, unless the Board of Directors determines, at its discretion, to reduce or eliminate such increase .As of December 31, 2025, the maximum aggregate number of Class A Ordinary shares that may be issued pursuant to awards under this 2021 Plan is 4,724,864.\n\nAs of December 31, 2025, 1,884,364 Class A Ordinary Shares were available for future grants under the 2021 Plan. Any share underlying an award that is cancelled, terminated or forfeited for any reason without having been exercised will automatically be available for grant under the 2021 Plan.\n\nIn general, options granted under the Plan vest over a three-year period and expire 10 years from the date of grant. The expiration date may not be later than 10 years from the date of grant unless determined otherwise by the board of directors. If a grantee leaves his or her employment or other relationship with the Company, or if his or her relationship with the Company is terminated without cause (and other than by reason of death or disability, as defined in the Plan), the term of his or her unexercised options will generally expire 90 days after the date of termination, unless determined otherwise by the Company.\n\nOptions granted to employees and non-employees\n\nThe following table summarizes option balances as of December 31, 2025, and changes during the year then ended:\n\nNumber of optionsWeighted-average exercise priceWeighted-average remaining contractual term (in years)Aggregate intrinsic value (in thousands) (1)\n\nOutstanding at January 1, 20253,806,089 $4.58 5.78$26,086 \n\nExercised(44,361)$0.01 \n\nForfeited(186,820)$39.83 \n\nOutstanding at December 31, 20253,574,908 $2.80 4.74$1,642 \n\nExercisable at December 31, 20253,387,972 $2.95 4.54$1,505 \n\n(1) Intrinsic value is calculated as the difference between the fair value of REE’s Class A ordinary shares as of the end of each reporting period and the exercise price of the option.\n\nF-27\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 11. SHARE-BASED COMPENSATION (cont.)\n\nThe weighted average grant date fair value of options granted during the years ended December 31, 2024 and 2023 was $4.65, and $10.86, respectively. No options were granted during the year ended December 31, 2025.\n\nThe weighted average exercise price of the Company's options granted during the years ended December 31, 2024 and 2023 was $0.00 and $0.03, respectively. No options were granted during the year ended December 31, 2025.\n\nThe total intrinsic value of options exercised during the years ended December 31, 2025, 2024 and 2023 was $38, $561 and $962, respectively.\n\nRSUs activity\n\nThe following table summarizes RSUs activity:\n\nNumber of RSUs outstandingWeighted-average ordinary fair value per share at grant date\n\nOutstanding at January 1, 20251,582,803 $5.73 \n\nGranted129,186 6.16\n\nVested(624,869)6.95 \n\nForfeited(136,532)5.85 \n\nOutstanding at December 31, 2025950,588 $4.97 \n\nThe weighted average grant date fair value of restricted share units granted during the years ended December 31, 2025, 2024 and 2023 was $6.16, $4.27 and $9.67, respectively.\n\nThe total fair value of RSUs, as of their respective release dates, was $1,359, $5,522 and $1,341 during the years ended December 31, 2025, 2024 and 2023, respectively.\n\nEquity-based compensation expense\n\nThe total equity-based compensation expense recognized in the Company’s consolidated statements of operations are as follows:\n\nYear ended December 31,\n\n202520242023\n\nResearch and development2,444 4,205 8,397 \n\nSelling, general and administrative2,623 5,380 7,881 \n\n$5,067 $9,585 $16,278 \n\nAs of December 31, 2025, unrecognized compensation costs related to share options and unvested RSUs were $843 and $3,737, respectively. These costs are expected to be amortized over a weighted average remaining period of 1.2 and 1.53, respectively.\n\nF-28\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 12. INCOME TAXES\n\nTax rates applicable to the Company\n\nThe taxable income of Israeli company is subject to a corporate tax rate of 23% for the years 2025, 2024 and 2023. The Company’s subsidiaries are separately taxed under the domestic tax laws of the jurisdiction of incorporation of each entity.\n\nLoss before taxes is comprised as follows:\n\nDecember 31, 2025December 31, 2024December 31, 2023\n\nDomestic (Israel)$(32,706)$(113,276)$(107,889)\n\nForeign(25,093)3,585 (7,679)\n\nTotal$(57,799)$(109,691)$(115,568)\n\nDeferred income taxes\n\nDeferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred tax assets are comprised of operating loss carryforward and other temporary differences.\n\nF-29\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 12. INCOME TAXES (cont.)\n\nThe following table presents the significant components of the Company’s deferred tax assets and liabilities:\n\nDecember 31, 2025December 31, 2024\n\nDeferred tax assets:\n\nOperating loss carryforward$106,161 $73,665 \n\nShare based compensation94,764 94,527 \n\nResearch and development15,038 15,449 \n\nAccrued social benefits and other471 559 \n\nOther costs1,067 442 \n\nOperating lease liability2,992 4,085 \n\nProperty and equipment, net\n1,819 — \n\nDeferred tax asset before valuation allowance$222,312 $188,727 \n\nValuation allowance(219,013)(182,851)\n\nTotal deferred tax assets$3,299 $5,876 \n\nProperty and equipment, net\n(26)(2,923)\n\nOperating lease right-of-use asset(3,273)(4,735)\n\nDeferred tax liabilities$(3,299)$(7,658)\n\nNet deferred taxes$— $(1,782)\n\nManagement currently believes that because the Company and its subsidiaries have a history of losses on a consolidated basis it is more likely than not that the deferred tax regarding the loss carry forward and other temporary differences will not be realized in the foreseeable future.\n\nThe net changes in the total valuation allowance for each of the years ended December 31, 2025 and 2024, are comprised as follows:\n\nDecember 31, 2025December 31, 2024\n\nOpening balance$182,851 $164,848 \n\nAdditions during the year36,162 18,003 \n\nEnding balance\n$219,013 $182,851 \n\nTaxes on income (tax benefit) are comprised as follows:\n\nDecember 31, 2025December 31, 2024December 31, 2023\n\nCurrent$(210)$(330)$(749)\n\nDeferred(1,782)2,393 (611)\n\n$(1,992)$2,063 $(1,360)\n\nDecember 31, 2025December 31, 2024December 31, 2023\n\nDomestic$57 $84 $92 \n\nForeign(2,049)1,979 (1,452)\n\n$(1,992)$2,063 $(1,360)\n\nF-30\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 12. INCOME TAXES (cont.)\n\nUncertain tax positions\n\nA reconciliation of the opening and closing amounts of total unrecognized tax benefits is as follows:\n\nDecember 31, 2025December 31, 2024\n\nOpening balance$— $685 \n\nTax positions reversed in current year related to previous years\n— (685)\n\nTax positions taken in current year— — \n\nAccrued interest— — \n\nEnding Balance$— $— \n\nSubstantially all the balance of unrecognized tax benefits, if recognized, would reduce the Company’s annual effective tax rate. The Company recognizes interest and penalties, if any, related to unrecognized tax positions in income tax expense. The Company believes that its income tax filing positions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position.\n\nReconciliation of the theoretical taxes on income (tax benefit) to the actual taxes on income (tax benefit)\n\nThe reconciliation of the amount that would result from applying the Company’s statutory tax rate in Israel to net loss before income tax to the reported amount of taxes on income (tax benefit) is as follows:\n\nYear ended December 31, 2025\n\nAmount\n\nPercent\n\nTax at Israeli statutory rate(13,294)23 %\n\nForeign Tax Effects\n\nUK\n\nChange in valuation allowance3,945 (7)%\n\nOther\n(421)1 %\n\nUS\n\nChange in valuation allowance828 (1)%\n\nOther\n82 0 %\n\nOther foreign jurisdictions1 0 %\n\nChange in valuation allowance18,184 (31)%\n\nNon taxable or non deductible items\n\nShare-based payment awards1,107 (2)%\n\nWarrants and derivatives remeasurements(11,978)21 %\n\nOther\n277 0 %\n\nTax credit\n\nR&D Tax Credit\n(592)1 %\n\nOther Adjustments(131)0 %\n\nEffective tax rate\n$(1,992)3 %\n\nF-31\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 12. INCOME TAXES (cont.)\n\nFor the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the primary reconciling items between the Company’s statutory tax rate and the effective tax rate were nondeductible expenses and the provision for a valuation allowance against deferred tax assets related to tax benefits from carryforward tax losses, due to uncertainty regarding their realization.\n\nTax paid during the year for taxes on income\n\nYear ended December 31, 2025\n\nDomestic (Israel)\n$62 \n\nForeign\n17 \n\nTax paid during the year for taxes on income\n$79 \n\nTax assessments\n\nThe Company has subsidiaries around the world subject to tax in the jurisdictions in which they operate. The significant jurisdictions in which the Company’s subsidiaries are subject to tax are Israel, the U.S, and the U.K.\n\nIncome tax returns are open for examination for the tax years 2020-2025 in Israel, 2015-2025 in the U.S., and 2021-2025 in the U.K. In Israel, the Company is currently undergoing a routine Israeli withholding tax audit by the Israeli Tax Authority for the tax years 2020 through 2023. As a global organization, the Company may be subject to a variety of transfer pricing challenges by taxing authorities in various jurisdictions. While management believes that adequate provision has been made in the consolidated financial statements for any potential assessments that may result from tax examinations for all open tax years, the completion of tax examinations for open years may result in changes to the amounts recognized in the consolidated financial statements.\n\nNet operating loss carryforward\n\nAs of December 31, 2025, the Company and its subsidiaries had net operating carry forward losses for tax purposes which may be carried forward and offset against taxable income in the future for an indefinite period.\n\nName of SubsidiaryNet Operating Loss Carryforwards\n\nREE Automotive Ltd$460,005 \n\nREE Automotive UK Limited$643 \n\nREE Automotive USA Inc.$864 \n\nREE Automotive Japan K.K.$84 \n\nF-32\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 13. CONVERTIBLE PROMISSORY NOTES\n\nOn November 27, 2023, the Company entered into Securities Purchase Agreements (\"SPAs\") with certain investors, pursuant to which the Company agreed to issue and sell Convertible Promissory Notes (the “Notes”) in the principal amount of $8,000, in the aggregate, at a conversion price of $5.09 per share (subject to adjustment as provided therein), and Warrants to purchase up to an aggregate of 1,571,710 of the Company’s Class A Ordinary Shares at an exercise price of $4.42 per share (subject to adjustment as provided therein). Closing under these SPAs occurred on December 3, 2023, pursuant to which the above Notes and Warrants were issued to the applicable shareholders.\n\nIn addition, on December 6, 2023, the Company entered into a subsequent SPA dated December 2, 2023, with a certain accredited investor, pursuant to which the Company agreed to issue and sell additional Notes in the principal amount of $750 at a conversion price of $5.74 per share (subject to adjustment as provided therein), and additional Warrants to purchase up to 130,662 Class A Ordinary Shares, at an exercise price of $5.74 per share (subject to adjustment as provided therein). Closing under this SPA occurred on December 20, 2023, pursuant to which the above Notes and Warrants were issued to the applicable shareholder.\n\nPursuant to the SPAs, the Notes have a five-year term since issuance and bear interest at 10% per annum, compounding annually. The Notes are not prepayable before maturity and are convertible at a price subject to customary adjustments and anti-dilution protections, with a minimum conversion price of $1.02 and $1.15 per share, respectively.\n\nThe Notes include customary default provisions, which may result in accelerated repayment if an event of default occurs, including non-payment, covenant breaches, bankruptcy, adverse judgments, trading restrictions, or material adverse effects, as defined in the SPAs. As of December 31, 2025 and 2024, no events of default have occurred.\n\nOn December 23, 2024, the Company received a notice of conversion for $300 of the principal amount, including accrued interest, of the Notes. As a result, the Company issued 72,780 Class A Ordinary shares at conversion price of $4.122.\n\nThe Warrants to purchase up to 1,571,710 Class A Ordinary Shares are exercisable at an exercise price of $4.42 per Class A Ordinary Share (subject to customary adjustments) and will have a term of five-years from the date of issuance, which was December 3, 2023. The Warrants to purchase up to 130,662 Class A Ordinary Shares are exercisable at an exercise price of $5.74 per Class A Ordinary Share (subject to customary adjustments) and will have a term of five-years from the date of issuance, which was December 20, 2023.\n\nThe Company determined that the Notes and the warrants are freestanding financial instruments since the instruments are legally detachable and separately exercisable. Then, the Company has evaluated the Notes for embedded derivatives required to be bifurcated and concluded that the conversion features and the redemption features should be bifurcated from the debt host since they are not clearly and closely related to debt host, they meet the definition of derivative instruments and no scope exception under ASC 815 is applicable for these features. Thus, the embedded features were bifurcated from the debt host and are accounted for at fair value through earnings. In addition, the Company has concluded that the warrants should be classified as liabilities, measured at fair value through earnings.\n\nAs such, the Company allocated the proceeds to the warrants and to the Notes based on their respective fair values with the remaining proceeds allocated to the debt host. The debt host is measured at its amortized cost using the effective interest method. As of the dates of the transactions, the amount allocated to the debt host was $589. As of December 31, 2025 and 2024 the amortized cost of the debt host was $3,706 and $1,883, respectively.\n\nF-33\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 14. WARRANT LIABILITIES\n\na.Pursuant to the Merger Agreement, the Company assumed warrants previously issued by 10X Capital consisting of 183,333 Private Placement Warrants and 335,417 Public Warrants, which were converted into warrants to purchase 518,750 Class A ordinary shares. The warrants to purchase 518,750 Class A Ordinary Shares gave the holder the right to purchase such shares at a fixed amount for a period of five years subject to the terms and conditions of the warrant agreement.\n\nIn September 22, 2022, a total of 2 Public Warrants were exercised into 2 Class A Ordinary shares of the Company.\n\nOn September 22, 2022, the Company completed a registered exchange offer (the \"Exchange Offer\") for its 518,750 outstanding warrants. A total of 434,445 warrants were exchanged for 86,890 Class A ordinary shares at an exchange ratio of 6.00 Class A Ordinary shares per warrant, which were settled on October 4, 2022. In connection with the Exchange Offer, the Company entered into Amendment No. 1 to the Warrant Agreement, dated September 23, 2022, granting the Company the right to mandatorily exchange the remaining 84,303 warrants for Class A ordinary shares at an exchange ratio of 5.40 shares per warrant. On the same date, the Company exercised this right, resulting in the issuance of 15,192 Class A ordinary shares on October 11, 2022.\n\nThe change in fair value of warrant liabilities was recorded through the date of exchange as change in fair value of warrant liabilities within the consolidated statements of comprehensive loss. Additionally, the fair value of the warrant liability as of the exchange date of $3,104 was reclassified to additional paid-in capital within the consolidated balance sheets as of December 31, 2023.\n\nb.As described in Note 13 above, on December 3, 2023 and December 20, 2023 (the” Closing Date”) the Company agreed to issue and sell Warrants to purchase up to an aggregate of 1,571,710 and 130,662, respectively, of the Company’s Class A Ordinary shares at an exercise price of $4.42 and $5.74, respectively, per share (subject to adjustments). As of December 31, 2025 1,702,372 Warrants are outstanding.\n\nc.On September 15, 2024, the Company has entered into Securities Purchase Agreements with certain investors for the issuance of Pre-Funded Warrants to purchase 3,639,893 at a price of $4.121 per pre-funded warrant. The purchase price per share of each pre-funded warrant represents the per share offering price of $4.122 per Class A Ordinary Share, minus the $0.001 per share exercise price of such pre-funded warrant. The total net proceeds from pre-funded warrants were $15,000. As of December 31, 2025, 3,639,893 pre-funded warrants are outstanding (see note 10 (c)).\n\nF-34\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 15. FAIR VALUE MEASUREMENTS\n\nThe following table presents information about the Company’s assets and liabilities fair value at December 31, 2025 and 2024 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:\n\nDecember 31, 2025\n\nLevel 1Level 2Level 3\n\nAssets:\n\nMoney market fund$910 $— $— \n\nTotal$910 $— $— \n\nAmounts included in:\n\nCash and cash equivalents$910 $— $— \n\nTotal$910 $— $— \n\nDecember 31, 2025\n\nLevel 1Level 2Level 3\n\nLiabilities:\n\nDerivative liabilities at fair value$— $— $1,124 \n\nWarrants liability—2,675 522 \n\nTotal$— $2,675 $1,646 \n\nF-35\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 15. FAIR VALUE MEASUREMENTS (cont.)\n\nDecember 31, 2024\n\nLevel 1Level 2Level 3\n\nAssets:\n\nMoney market fund$28,843 $— $— \n\nBank deposits— — — \n\nTotal28,843 — — \n\nAmounts included in:\n\nCash and cash equivalents$28,843 $— $— \n\nShort-term investments— — — \n\nTotal$28,843 $— $— \n\nDecember 31, 2024\n\nLevel 1Level 2Level 3\n\nLiabilities:\n\nDerivative liabilities at fair value$— $— $12,875 \n\nWarrants liability$— 32,1409,010 \n\nTotal$— $32,140 $21,885 \n\nFair value of warrants liability\n\nThe Warrants issued as part of the SPAs mentioned in Note 13 were valued using Black Scholes Option Pricing Model, which is considered to be a Level 3 fair value measurement. As part of the inputs used in the Black-Scholes model to determine the fair value of these Warrants, the expected volatility of the Class A Ordinary shares was estimated based on the historical volatility of the Company's own publicly traded shares.\n\nThe following table provides the inputs used for Level 3 fair value measurements of warrants liability:\n\nDecember 31, 2025December 31, 2024\n\nStock price$0.74$8.83\n\nStrike price$4.42-$5.74$4.42-$5.74\n\nTerm (in years)2.89-2.941.5-2.5\n\nVolatility122.22%-122.90%97.80%-116.20%\n\nRisk-free rate3.62%-3.63%4.19%-4.30%\n\nDividend yield0.0%0.0%\n\nThe pre-funded warrants mentioned in Note 14 are classified as Level 2 due to the use of observable market data for similar instruments. The fair value of the pre-funded warrants is determined to be consistent with the fair value of the Company's Class A Ordinary share due to the nominal exercise price.\n\nF-36\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 15. FAIR VALUE MEASUREMENTS (cont.)\n\nDerivative liability at fair value\n\nDerivative liability at fair value was valued using a Monte-Carlo simulation, which was considered to be a Level 3 fair value measurement. The Monte-Carlo simulation primary input utilized in determining the fair value of the Derivative liability was the expected volatility of the Class A ordinary shares. The expected volatility was based on the historical price of the Company’s Class A ordinary shares.\n\nThe following table provides the inputs used for Level 3 fair value measurements of derivative liability:\n\nDecember 31, 2025December 31, 2024\n\nStock price$0.74$8.83\n\nTerm (in years)2.89-2.941.5-2.5\n\nVolatility122.22%-120.90%95.00%-96.54%\n\nRisk-free rate3.62%-3.63%4.48%-4.49%\n\nCost of Debt (Rd)\n15.72%-15.96%7.64%-7.64%\n\nDividend yield0.0%0.0%\n\nChanges in the fair value of Level 3\n\nThe following table presents the changes in the fair value of Level 3 warrants and derivative liabilities for the year ended December 31, 2025 and 2024:\n\nTotal Level 3 Financial Liabilities\n\nBalance at December 31, 2024$21,885 \n\nChange in fair value of derivative liabilities at fair value(11,751)\n\nChange in fair value of warrants liability(8,488)\n\nBalance at December 31, 2025$1,646 \n\nTotal Level 3 Financial Liabilities\n\nBalance at December 31, 2023$7,526 \n\nChange in fair value of derivative liabilities at fair value9,143 \n\nPartial conversion of convertible notes(394)\n\nChange in fair value of warrants liability5,610 \n\nBalance at December 31, 2024$21,885 \n\nIn addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators may subject long-lived assets to nonrecurring fair value measurements. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting impairment is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group shall not reduce the carrying amount of that asset below its fair value whenever that fair value is determinable without undue cost and effort. In determining fair value, management utilized the market approach with Level 3 inputs (see Note 6).\n\nF-37\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 16. FINANCIAL INCOME (EXPENSES), NET\n\nThe components of financial income (expenses), net are as follows:\n\nYear ended December 31,\n\n202520242023\n\nInterest income$1,523 $2,874 $4,488 \n\nForeign currency translation income (loss), net\n(608)80 (549)\n\nInterest expenses(959)(924)(80)\n\nIncome (loss) from derivatives remeasurement11,751 (9,143)240 \n\nOther expenses(1,049)(699)(171)\n\nFinancial income, net\n$10,658 $(7,812)$3,928 \n\nF-38\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 17. BASIC AND DILUTED NET LOSS PER SHARE\n\nThe following table sets forth the computation of basic and diluted losses per share:\n\nYear ended December 31,\n\n202520242023\n\nNumerator:\n\nNet loss for basic and diluted loss per share$(55,807)$(111,754)$(114,208)\n\nDenominator:\n\nWeighted average number of Class A Ordinary shares used in computing basic and diluted net loss per share\n32,140,321 15,933,291 10,087,691 \n\nBasic and diluted net loss per Class A Ordinary shares\n$(1.74)$(7.01)$(11.32)\n\nF-39\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 18. REPORTING SEGMENT AND GEOGRAPHIC INFORMATION\n\nThe Company operates as a single operating segment, with its Chief Executive Officer acting as the Chief Operating Decision Maker (CODM). The CODM regularly reviews the financial information on a consolidated basis and evaluates the segment's performance based on its operating loss and net loss, as reported in the consolidated statements of comprehensive loss. This financial metric is used to assess overall business performance, support resource allocation decisions and annual budgeting process.\n\nThe CODM does not review segment-specific asset information when evaluating the Company's performance, and therefore, such details are not presented.\n\nThe following table presents financial information with respect to the Company’s single operating segment for the years ended December 31, 2025, 2024 and 2023:\n\nYear ended December 31,\n\n202520242023\n\nRevenues$1,297 $183 $1,608 \n\nCost of revenues non-recurring costs (1)\n15,936 — — \n\nCost of revenues1,635 3,681 3,270 \n\nGross loss$(16,274)$(3,498)$(1,662)\n\nResearch and development employee labor costs (excluding share based compensation expenses)19,167 21,821 24,068 \n\nOther research and development expenses24,579 29,131 37,959 \n\nResearch and development share based compensation expenses2,444 4,205 8,397 \n\nResearch and development non-recurring expenses (2)(758)(5,697)12,238 \n\nSelling, general and administrative employee labor costs (excluding share based compensation expenses)7,884 10,609 11,330 \n\nOther selling, general and administrative expenses8,990 10,182 15,707 \n\nSelling, general and administrative share based compensation expenses2,623 5,380 7,881 \n\nSelling, general and administrative non-recurring expenses (3)491 — 650 \n\nImpairment of long-lived assets (4)\n24,716 — — \n\nTotal operating expenses90,136 75,631 118,230 \n\nOperating loss$(106,410)$(79,129)$(119,892)\n\nIncome (Loss) from warrants remeasurement37,953 (22,750)396 \n\nFinancial income (expenses), net10,658 (7,812)3,928 \n\nNet loss before income tax(57,799)(109,691)(115,568)\n\nTaxes on income (tax benefit)(1,992)2,063 (1,360)\n\nNet loss$(55,807)$(111,754)$(114,208)\n\nF-40\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 18. REPORTING SEGMENT AND GEOGRAPHIC INFORMATION (cont.)\n\n(1) Includes inventory write-downs to net realizable value and write-offs of inventory that currently has no operational use and one-time costs related to the pause in production.\n\n(2) Includes one-time expenses related to reduction-in-force of R&D employees in the amount of $1,610 and R&D tax credit income in the amount of $2,368 during the year ended December 31, 2025 and R&D tax credit income during the year ended December 31, 2024.\n\n(3) Includes one-time expenses related to reduction-in-force of SG&A employees during the year ended\n\nDecember 31, 2025.\n\n(4) Impairment charges of long-lived assets and loss from lease termination (see Note 5 and Note 6).\n\nEntity wide disclosures\n\nThe Company attributes revenues from external customers to individual countries based on the customer’s billing address.\n\nNet sales attributed to countries that represent a significant portion of consolidated net sales are as follows:\n\nYear ended December 31,\n\n202520242023\n\n Germany $801 $— $— \n\n Japan$408 $— $— \n\n France $60 $11 $1,398 \n\nUnited States\n28 172 210 \n\n Total $1,297 $183 $1,608 \n\nLong-lived assets other than financial instruments attributed to countries that represent a significant portion of consolidated assets are as follows:\n\nDecember 31, 2025December 31, 2024\n\nIsrael17 %14 %\n\nUnited Kingdom\n53 %64 %\n\nUnited States\n30 %22 %\n\nF-41\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 19. RELATED PARTY TRANSACTIONS\n\nAgreements with Directors and Officers\n\nThe Company has entered into the following agreements, which were approved by REE’s board of directors in accordance with Israeli law, and also by REE’s shareholders to the extent required by Israeli law.\n\nJoint Ownership Agreement for Company Vehicle. During 2021, REE entered into an agreement with co-founder, director, and CEO Daniel Barel, relating to joint ownership of a company car. REE undertook to provide Daniel Barel with a company car, the value of which is an amount of up to NIS 300 thousand to be borne by REE. The excess cost of the car purchased for such purpose has been, and the ongoing fixed cost of the car will continue to be, borne by Daniel Barel. Such car is registered under REE’s name, but Daniel Barel is entitled to an ownership portion of such car, corresponding to the excess acquisition cost thereof borne by him. In October 2025, the Company sold the company car in the amount of approximately $92 and recognized a capital gain of approximately $44. In accordance with the terms of the agreement, a portion of the proceeds from the sale, reflecting Mr. Barel’s ownership interest in the vehicle, was remitted to Mr. Barel.\n\nEmployment of Daniel Barel’s Father-in-Law. Since 2021 co-founder, director, and CEO Daniel Barel’s father-in-law was employed by the Company in the selling, general, and administrative department. His employment with the Company ended during the year 2025.\n\nSpecterX Transaction. On October 29, 2021, REE entered into a license agreement with SpecterX for secure file exchange services. The co-founder and CEO of SpecterX is the brother of co-founder, director, and CEO Daniel Barel. Daniel Barel is also the Chairman of the Board and an investor of SpecterX. Prior to entering into the agreement with SpecterX, REE conducted an extensive analysis of the available solutions, and determined that SpecterX best met REE’s needs. On May 14, 2026, the Company reviewed and re-approved the license agreement with SpecterX.\n\nAgreement with Samvardhana Motherson International Limited (\"Motherson\") and REE. In September 2024, the Company entered into SPAs, with Motherson included as one of the investors (see Notes 10(c) and 10(e)). Motherson has agreed to provide services relating to development, management, and optimization of the Company’s supply chain which shall also include supplier development and management, part development cost management, contract and purchase order management, supply chain management including logistics, compliance and regulatory adherence, crises and risk management, resource planning, and information and technology system integration. The Company has agreed to pay Motherson, on a quarterly basis, an amount equal to fifty percent (50%) of certain cost improvements that would be achieved under the Motherson Agreement (“Quarterly Fees”) in addition to annual payments for such resources required to be deployed by Motherson for the purpose of rendering the services under the Motherson Agreement, which shall be agreed upon by REE and Motherson. During the year ended December 31, 2025 the Company has incurred $256 under this agreement.\n\nTransactions with the related parties were as follows:\n\nYear ended December 31,\n\n202520242023\n\nSelling, general and administrative expenses, net$80 $126 $41 \n\nBalances with the related parties were as follows:\n\nDecember 31, 2025December 31, 2024\n\nEmployees and payroll accruals$— $51 \n\nF-42\n\nTable of Contents\n\nREE AUTOMOTIVE LTD. AND ITS SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\nDECEMBER 31, 2025\n\nU.S. dollars in thousands (except share and per share data)\n\nNOTE 20. SUBSEQUENT EVENTS\n\na.In January 2026, the Company executed executed additional measures under its cost reduction plan, including an additional reduction-in-force. As of the date of this Report the Company incurred one-time expenses of $206 in connection with the reduction-in-force.\n\nb.In March 2026, the Company, through its UK subsidiary (REE Automotive UK Limited), entered into an agreement with the landlord and a third-party assignee, for the assignment of its lease agreement relating to its facility in Coventry, UK, originally expiring in 2032. As part of the assignment, the Company was released from its lease obligations effective March 10, 2026. The Company received a gross refund of its rent deposit in the amount of approximately $2,316 (£1,735). Pursuant to the assignment agreement with the third party, the Company provided a rent deposit in the amount of approximately $761 (£570) in connection with the assignee’s lease, which will be released upon the expiration of the original lease term in 2032. In addition, the Company incurred certain costs in connection with the assignment of the lease in the amount of approximately $238 (£178).\n\nc.The Company, through its U.S. subsidiary (REE Automotive USA Inc.), had a leased facility in Austin, Texas with an original term through 2032. The Company has not utilized this facility in 2026 and the landlord retook possession of the property. In May 2026, the U.S. subsidiary entered into an agreement with its landlord to terminate the lease and the obligations therein. As a result, the lease agreement was terminated effective May 8, 2026.\n\nd.In April 2026, the Company entered into an agreement with the landlord to permit the use by a third party of approximately one-third of the total office space in its corporate offices in Glil-Yam, Israel. According to the agreement, the Company’s lease payment and municipal tax payment will be reduced to approximately two-thirds of the original lease payment amount. Additionally, the third party will reimburse the Company for approximately one-third of its average monthly total utility expense.\n\ne.On May 5, 2026, REE Automotive UK Limited, a private limited company organized under the laws of England and Wales (“REEUK”), and a wholly-owned subsidiary of the Company, commenced an administration process in the United Kingdom. Immediately prior to this process, certain REEUK employees were transferred to REE Software UK, a newly organized entity in the United Kingdom. Following the appointment of an administrator, such administrator will seek to sell any or all of REEUK’s assets to one or more third parties, in order to maximize recoveries for creditors, and to wind down any remaining operations.\n\nf.On April 27, 2026, the Company approved a financing arrangement with Daniel Barel, the Company’s CEO, co-founder, and director, and Ahishay Sardes, the Company’s CTO, co-founder, and director, pursuant to which each agreed to defer certain termination-related entitlements, including accrued vacation days and notice period payments, totaling an aggregate amount of approximately $1.3 million. The deferred amounts constitute bridge financing to the Company and accrue interest at an annual rate of 18%, with a minimum interest owed of 25% of the total deferred amounts. Such financing shall be payable only upon the consummation of a strategic transaction, with full priority rights for the deferred principal amounts pari passu with other creditors with respect to any interest owed. Such financing may also be payable in the event of a forced liquidation or voluntary wind-down of the Company, provided that there are sufficient assets available to make all or part of such payment. The Company determined that the arrangement constituted a non-extraordinary transaction with controlling shareholders under the Israeli Companies Law, 5759-1999.\n\nF-43"}